UUGRY
United Utilities Group PLC
$39.83
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 6.8% above fair value
You pay
$39.83
Bear
$32.63
Fair
$37.29
Bull
$41.95
Bear
$32.63
-18.1%
$2.33 × 14x P/E
Fair
$37.29
-6.4%
$2.33 × 16x P/E
Bull
$41.95
+5.3%
$2.33 × 18x P/E
Adjust Assumptions
16.0x
2.33$
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
17.1x
Summary
Applying a 16x P/E to adjusted EPS of $2.33, the base-case value is $37.29 per share. DDM cross-check: $153.30.
Warnings
The company pays out 119% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $153.30 (above our primary estimate by 311%). Large gaps may signal the dividend doesn't reflect full earning power.
Financial statements were converted from GBP into USD using GBPUSD at 1.3394 USD per GBP.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples